O2 threatens legal challenge to UK 5G auction
Mobile operator’s move could potentially delay sale already affected by coronavirus upheaval
The sale of spectrum for 5G networks could be significantly delayed after O2 warned the telecoms regulator that it intends to legally challenge the rules it has set for the auction.
A fresh sale of the airwaves was due to take place in the second half of this year, although the process has been paused because of the coronavirus pandemic and Ofcom has not set a firm auction date. However, a judicial review could potentially delay the sale of new frequencies capable of carrying 5G signals by up to 18 months, said a person with direct knowledge of the situation.
Telecoms companies wishing to bid had until last week to inform Ofcom whether they intended to disrupt the auction by sending a so-called “letter before claim” to raise concerns that not been resolved during previous consultations.
O2 has issued such a letter, according to multiple people with direct knowledge of the situation.
The complaint relates to a highly technical point about how the blocks of spectrum are to be sold. O2 wants Ofcom to harmonise the lots of spectrum so that they are contiguous, instead of frequencies being fragmented slices.
Telecoms companies are able to trade spectrum once the auction is over but it adds complexity and risk for mobile networks.
An Ofcom spokesman said: “People and businesses need fast, reliable mobile services more than ever, so we want to auction these airwaves as soon as possible. We’re really disappointed that one operator has threatened to launch a legal dispute that could slow things down for mobile users and the economy.”
O2 declined to comment.
A judicial review could yet be avoided after Ofcom issued a short consultation period related to one aspect of the 5G auction although it is unclear whether the scope of this will resolve O2’s concerns.
O2, owned by Spain’s Telefónica, is in talks with Virgin Media, owned by Liberty Global, over a potential merger to create a stronger competitor to BT.
It is the second challenge that Ofcom has faced with the sale of spectrum in the 700Mhz and 3.6-3.8Ghz range.
Objections to spectrum auctions are common. Ofcom successfully defended itself following a legal challenge fought by Three and BT in 2017.
For the upcoming action, the regulator had planned to offer discounts on spectrum licences for companies that invested in filling “not spots” in rural areas, but changed tack after the industry committed to spend £1bn alongside the government to improve rural mobile coverage as part of the ‘shared rural network’.
The government raised £22.5bn in 2000 selling spectrum in the 3G auction but the value of the airwaves has plummeted since that time as mobile phone services have proved to be less profitable than expected and the number of competitors has reduced.